What Are the Rules Landlords Should Know About Rental Applications and Can I Charge a Tenant Application Fee?

When talking to landlords, two common questions they ask are what rules should I be aware of regarding the rental application form I use and can I charge the prospective tenant an application fee?

There are laws in place regarding both of these issues that you should be aware of to ensure that you handle this process correctly. We’ll walk you through the pitfalls to help you avoid any legal issues.

First and foremost you have to be clear in your application if you are going to be screening the tenant and you will need to list the type of information that will be accessed to conduct the screening (i.e., credit report, public records, eviction filings).  Free Tenant Application

In regards to charging an application fee, you can only charge your applicants for your cost of the screening fees and you can only charge the applicant these fees if you provide written notice that you will be conducting screening (such as on the application the tenant signs).  It’s important to note that the law states that you cannot profit from application fees. You can only change what the processing of screening information costs you.

Most landlords pay tenant screening companies to research tenant applicants. The tenant screening company can conduct criminal background checks, eviction history, court records, employment verification, landlord reference checks, history of late payments and bankruptcies.

The law also requires that if you wish to deny the tenant’s rental application that you must provide a written adverse action notice stating the specific reasons and consumer report or information that led to the denial. If you as the landlord fail to provide the prospective tenant with a written notice before screening or a written adverse action notice if denied, then the landlord may be liable to the tenant for legal damages.  Free Denial Letter

You are also required by law to provide the rejected applicant the contact information for the consumer reporting agency (if you are using a screening company). You must also notify the applicant that they have the right to request a free copy of the consumer report if they are denied and that they have the right to dispute the accuracy of the consumer report.  Free Denial Letter

 

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